As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Unexpectedly dovish BoE commentary drives pound lower
- Euro braces for fresh German inflation data
- Market risk appetite limits US dollar appeal
Confirmation of soft UK growth set to add to pound losses
Comments from Bank of England (BoE) policymaker Michael Saunders prompted the pound to trend sharply lower ahead of the weekend.
As Saunders indicated that the BoE’s next move could be an interest rate cut rather than a hike the mood towards the pound soured.
With the finalised second quarter UK gross domestic product data expected to confirm that the economy lost momentum on the quarter, the potential for GBP exchange rate gains appears limited.
Euro vulnerable to weakening German inflation
Although August’s German producer price index saw a further contraction this failed to weigh on the euro.
The impact of the report was limited as markets have already priced in higher odds of the European Central Bank (ECB) enacting further monetary loosening before the end of the year.
However, with the headline German consumer price index looking set to weaken on the year the euro could dip today.
Signs of manufacturing weakness forecast to weigh on US dollar
A mixed bag of US data and an improvement in market risk appetite saw the US dollar fall out of favour on Friday.
This bearishness could persist if September’s Dallas Fed manufacturing index weakens as forecast this afternoon.
Investors expect to see fresh evidence of a loss of momentum within the US manufacturing sector, something which would raise the risk of a wider economic slowdown.
Unless the sector delivers a stronger performance USD exchange rates may struggle to return to a positive footing in the near term.
Monday, 30th September 2019
09:30 GBP Gross Domestic Product
13:00 EUR German Consumer Price Index
15:50 USD Dallas Fed Manufacturing Index
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)